President/CEO Larry Reaugh tells ResourceClips.com, “We’re certainly happy. Most of the drilling was infill drilling, and it’s moved up the indicated resource, a much more confident resource, by 123%. We did a little drilling outside the boundaries, and overall the entire resource went up just under 20%. We now have almost 15 billion pounds of manganese indicated, where we had less than half of that amount of indicated previously. And of course we’ve only touched 20% to 25% of the property, so we expect further drilling will bring more increases.

We now have almost 15 billion pounds of manganese indicated, where we had less than half of that amount of indicated previously. And of course we’ve only touched 20% to 25% of the property—Larry Reaugh

“We’re not drilling at the moment,” he points out. “We may go back this fall. It all depends on the market, but we are completing our pilot plant testing. That got underway around August 18, and I expect that’ll be complete sometime this weekend. Everything we’re seeing there is looking really good. So we’re not expecting any surprises.

“Wardrop [Engineering] is working on prefeasibility. They’ll take the results from the pilot plant; they’ll model a pit from the latest resource study; and they’ll deliver a report hopefully at the end of October or early November.

“We hope to be in production by mid-2014. So far there’s nothing to say that we can’t, but it all depends on permitting and a few other things. Market conditions are always a factor, and permitting is a major factor. But Arizona is the largest mining state in the US, and our project, compared to some of the big copper, copper-moly projects that have gone ahead recently in Arizona, is miniscule in size.”

Reaugh adds, “China controls about 98% of manganese production. They are shutting down some production for environmental and efficiency reasons, plus they’re starting to police the border between China and Vietnam to hopefully stop the smuggling to the European market. All that will decrease the amount of supply, and I expect demand will increase as rapidly as it has in the past, so I can foresee shortages that would lead to higher prices.

“It’s not a luxury item; it’s a necessity. You can’t make steel without manganese. If you want to get into specialty stainless steels, you need the metal. Certainly the aluminium industry is about a third of the entire demand, so it’s a necessity. There’s no substitute for it.

“Our big advantage, according to our PEA, is that we could be the lowest-cost producer in the world,” he explains. “Right now we’re certainly looking at well under half what it costs to produce in China, and it’s all to do with the process. That’s what the pilot plant is all about. That’s looking excellent, so I’m very happy.

“Continuous operation at the pilot plant has been excellent. It’s performed 100%. But we won’t have the report about metallurgical recoveries, what’s in the tailings, what we might be losing in the system or water efficiencies for at least another month.

“I think the pilot plant is probably the turning point in the company’s progression,” Reaugh emphasizes. “We’ve had a process that we worked in batches, and it has performed. But on a continuous basis, that’s a different story. Now we’ve been running material for several days on a continuous basis, and the results, like liquid-solid separation and all those things, are performing as we want them to. I think we’re going to remove the big hurdle which a lot of companies, some of our competitors and other mining companies, would look at as a potential risk. We’re going to eliminate that within a month.”